17 position was taken; that is, after the notice of deficiency was issued. For example, respondent argues that: (1) Respondent was substantially justified because respondent promptly settled the accumulated earnings tax issue soon after petitioner told respondent about petitioner's error, and (2) respondent's position had a basis in fact because petitioner's section 534(c) statement was insufficient to shift the burden of proof to respondent. We disagree. Respondent must have a basis in fact when respondent issues the notice of deficiency. Powers v. Commissioner, 100 T.C. at 473, 477-478; Kingston v. Commissioner, T.C. Memo. 1998-119; Grimland v. Commissioner, T.C. Memo. 1993- 367; see Pierce v. Underwood, 487 U.S. at 564-565. We do not consider events occurring after respondent's position was adopted, such as respondent's prompt concession or petitioner's failure to allege specific facts in its section 534(c) statement, in deciding whether that position was substantially justified. Powers v. Commissioner, supra at 477. 3. Conclusion Respondent has not shown that respondent had a basis in fact for the position that petitioner unreasonably accumulated earnings for FY 1992, 1993, and 1994 when respondent sent the notice of deficiency or filed the answer.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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